Are Nigerian Bloggers Expected To Pay Tax?
Are Nigerian Bloggers Expected To Pay Tax?
Seun, a young unemployed Nigerian graduate owns a lifestyle blog in Nigeria. This Lifestyle blog generates as much as two million monthly page views and a lot of engagement. Recently Seun was approached by EtiMuMu Limited in Nigeria and TravelHub in United Kingdom over advert slots on his blog.
Due to the impressive traction on Seun’s blog, every advertiser is looking for an opportunity to obtain an advert slot on his blog. Anyways, Seun decided to avail the advertisers advert slot on his blog.
After inserting the advert banners of the advertisers on the blog, it was time to request for payment and the advertising company requested that Seun prepare his cash invoice indicating his tax identification number so that necessary tax deductions can be made.
The foreign blog also stated that Seun should make the invoice tax inclusive so that they can remit VAT on the invoice after making payments into Seun’s account.
Now Seun is confused.
He is not a full-time professional blogger, writer or media company. He is just a young school leaver who feels who could make some online cash writing on an online, free platform.
I am very sure that Seun is not the only Nigerian blogger going through this phase and having this issue with numerous native and foreign advertisers, there are other bloggers having the same tax problems.
Now this brings us to the question, are Nigerian bloggers expected to pay tax?
Blogging has come to stay in Nigeria, you would agree with me right? Whether as a source of passive income to people who love writing or as that incremental revenue for passionate Nigerian bloggers, Blogging is now seen as a medium of self-sustenance on the long term for Nigerians.
A lot of questions that should come to the mind of Nigerian bloggers are the relationship the blogs have made them create with other registered businesses in terms of expenses.
From Domain cost, to hosting payments, Digital marketing expenses to mention a few. Have you ever thought of how these companies manage their expenditures and leverage these expenses to pay taxes to various authorities?
It does not concern you, right?
A lot of bloggers may even argue based on materiality on whether their blogs can be deemed to be a business or not since e-commerce is an area of taxation where the FIRS Inland Revenue Service are still battling with and also the fact that the income made from the blog online cannot pass as being taxable.
However it is important to note that while income from Adsense or other form of online advertising can be argued on the basis of immateriality, what about direct native advertising?
What about your blog being seen as a media company based on the volume of traffic coming onto the blog and the various offline strategic partnership the online platform is getting into.
What about offline alliances and relationships with brands that may lead to benefits in kind, and other fringe benefits of maximizing the potentials of one’s passion. Are these not taxable?
Okay, so if we still are bent on arguing the non-tax deductibility of all these incomes generating spectrums. How about direct advertisements?
Just in case the tax inexperience of numerous bloggers have come to fore, it is important to note that for accounting and tax purposes advertisement can be seen to be advertisement cost on the part of a business and income for other business.
Infact there are media agencies like media buyers whose bottom-line are tied to advertisement income. If your blog generates tremendous income from advertisement, especially direct advertisement, then there is the potential for exposure to tax and taxation.
To take a deep peek at this, we ought to ask ourselves certain rhetorical questions. Are there people who have their sources of living off blogging? Have you set up your blog as a media company in form of business enterprise? Are you a professional blogger and content writer?
Do you make blogging income from direct advertisement?
Are you selling a service from your blog? A blogger could be a content writer, copy writer, SEO strategist, web designer, and the possibility of earning income from this service is high. Does that still make you a hobby blogger that you think you are?
Let’s even assume that you work in some company and still earn certain income from various services that you render from your blog. Does this truly confirm that you can separate your employment income from the blog income?
The more we take a dig into this, the more the exposure we are learning on Nigerian taxes. The theories from the statement above will in turn lead us to the following questions:
How did Seun sort out his advert slot issue?
What mode of taxes are bloggers supposed to pay?
Who are the professional bloggers and who are the hobby bloggers?
What about other law and financial issues associated with blogging, and online business activities?
Are Bloggers Expected to Pay Tax (Part 2)
SHOULD BLOGGERS BE TAXED?
The answer is YES and NO. We could look at this from the angle of the LAW and from the angle of the determination on the basis of what ‘mode’ of blogging is in perspective. The first question to ask is are certain bloggers hobby bloggers or professional bloggers.
Empirically speaking, bloggers and freelancers and webmasters and other people who offer specialized online services in different genres may be considered owners of their own businesses, and or people who get paid for using their talent and or acquired skill.
Bloggers and webmasters usually earn income from advertising and from selling their services. Other online professionals, such as virtual assistants, social media strategists, SEO specialists, content writers and website designers usually earn income from selling their services. In this case Bloggers may be considered as self-employed individuals.
It is true that in Nigeria, the Federal Inland Revenue Service is still battling with making e-commerce generally and blogging a taxable means of earning income – there are a lots of issues trying to establish whether blogging is seen as a hobby or as a professional means of doing business. But it is also important to note that bloggers do native advertising of company’s products.
For example on Linda Ikeji’s blog, a lot of advertising is done for a lot of companies ranging from small businesses to multinational corporations who leverage on the traffic on her page to promote their business concerns. On that count, it will not be fair not to consider that a taxable income, since we have companies whose revenue are stemmed from advertisement itself.
Further, freelance writers and online professionals may argue that their services are immaterial and therefore cannot be taxed. A blog can be seen as a publishing company of some sort, just like a media house which owns print and electronic publishing platforms. In that case, the argument for it being taxable carries the day. Besides, there are offline strategic partnerships that ensue from just promoting a business, from where a blogger earns big.
There is also the direct advertisement angle of blogging. This is a complete taxable income and incurs some tax liability too.
So yes, bloggers are required to pay tax. But that isn’t all there is to it. there are few pertinent questions and clearances that are critical to the understanding of this discourse.
Let’s get to the difference between a professional and a Hobby blogger:
The truth remains that blogging is a painstaking, sometimes difficult venture that requires consistency, persistence, and hard research as well as passion. A lot of people consider blogging to be somewhat of a pastime, but there are levels when it crosses the line and becomes a full time and rewarding business. However, this takes time and nurturing.
In the Companies income tax act, Section 9:
Imposition of tax and profits chargeable
Charge of tax
(1) Subject to the provisions of this Act, the tax shall, for each year of assessment, be payable at the rate specified in subsection (1) of section 40 of this Act upon the profits of any company accruing in, derived from, brought into, or received in, Nigeria in respect of‐
(a) any trade or business for whatever period of time such trade or business may have been carried on;
(b) rent or any premium arising from a right granted to any other person for the use or occupation of any property; and where any payment on account of such a rent as is mentioned in this paragraph is made before the expiration of the period to which it relates and is included for the purposes of this paragraph in the profits of a company, then, so much of the payment as relates to any period beginning with the date on which the payment is made shall be treated for these purposes as accruing to the company proportionately from day to day over the last‐mentioned period or over the five years beginning with that date, whichever is the shorter;
(c) dividends, interests, royalties, discounts, charges or annuities;
(d) any source of annual profits or gains not falling within the preceding categories;
(e) any amount deemed to be income or profit under a provision of this Act or, with respect to any benefit arising from a pension or provident fund, of the Personal Income Tax Act;
(f) fees, dues and allowances (wherever paid) for services rendered;
While this may be seem confusing to a lot of bloggers out there, simply put this explanation this way, income tax will be levied on any form of trade or business for as long as the business has been carried on over years.
Therefore it is important to ascertain whether business transactions are being consummated, services are being provided, direct advertisement are being done from an blogging platform. This can be used to address the issue on whether a blogger is an hobby blogger or a professional blogger cum business owner.
The following characterization helps to draw the line, however fine, between blogging for fun and making money out of it:
Hobby bloggers do it mainly for fun and leisure, not necessarily for the money, although money can also come in through Google Adsense and traffic, but it will be limited. On the other hand, business bloggers want to make money through it.
Hobby bloggers may or may not have specific area of specialization when it comes to topics, but professionals usually focus on niches where they feel more comfortable to blog about, like lifestyle, sport, health, entertainment, politics, etc.
You can’t get on to this highly expository content on:
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